Unions want to prevail over taxpayers

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.

Unions want to prevail over taxpayers

Political power often translates into taxpayer-funded handouts to special-interest groups, but rarely is that dynamic seen so clearly as at the Legislature this last Wednesday, when Nevada’s labor unions held a small rally protesting a bill proposal by Assemblyman Cresent Hardy.

Hardy’s bill, which had a committee hearing Wednesday, would raise the threshold for when government construction projects must pay prevailing-wage rates from $100,000 to $1.5 million.

The prevailing wage is supposed to approximate the wages that “prevail” in the marketplace, but state regulations ensure that the vast majority of these wage rates are set at union rates — which are substantially higher than market rates.

So when a government entity in Nevada seeks a bid for a construction project worth more than $100,000, it doesn’t pursue the best deal. It requires that the winning contractor pay its employees at the “prevailing” wage rate — even though this substantially increases the cost to taxpayers. A study by NPRI’s deputy policy director, Geoffrey Lawrence, estimated that this requirement cost taxpayers almost $1 billion in 2009 and 2010. That’s a billion dollars less for building schools and roads or that could have been returned to taxpayers.

So if taxpayers lose, who wins? Labor unions — one of the most powerful special-interest groups in Carson City.

Requiring higher wages makes higher-priced union labor competitive. How high-priced is this labor? Consider these “prevailing” wage rates in Clark County: A flagperson must be paid at least $43.79 an hour in salary and benefits. A painter must make at least $47.58 an hour in total compensation. An alarm installer must make at least $56.87 an hour in total.

Yet these high wage rates didn’t keep labor lobbyist Al Martinez from crying, “When you go below the prevailing wage you can’t survive on that salary.”

Yes, how could anyone survive making less than $40 an hour, which is over $80,000 a year, in pay and benefits?

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law — which may be an isolated case — is not abolished immediately, it will spread, multiply, and develop into a system.

The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. In fact, this has already occurred. The present-day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it.

Bastiat wrote those words more than 150 years ago, but his recommendations couldn’t be more spot-on today. The Legislature should abolish Nevada’s prevailing-wage law without delay and ignore the sophistry spouted by vested union interests.

In other news, yesterday NPRI filed a public-records lawsuit against the Clark County School District. All the details are here, and we’ve already received a bunch of positive feedback. It appears we’re not the only ones excited to have the ability to try to compel CCSD to follow the law, instead of just asking nicely.

What are your thoughts on the prevailing wage or on NPRI’s lawsuit? Please let me know.

Andy Matthews is the president of NPRI and has been with the Institute since February 2007. Andy is the fourth president in NPRI's history. He joined NPRI in February 2007 as its communications director and became a vice president at the Institute in 2008.